Judge allows cuts to Arizona's Medicaid program

by Mary K. Reinhart - Aug. 11, 2011 12:00 AMThe Arizona Republic

A Maricopa County Superior Court judge on Wednesday refused to block cuts to the state Medicaid program, saying a voter-approved law requiring health coverage for Arizonans below the poverty level doesn't force the Legislature to pay for it.

Judge Mark Brain's ruling means an enrollment cap for childless adults will remain in place, eliminating an estimated 110,000 people from the rolls in the coming year and freezing out an untold number of low-income Arizonans.

Lawyers representing people who have been denied health care since the freeze was imposed July 8 argued that it violated state law, passed by voters in 2000, and the state Constitution, which voters amended in 1998 to prevent legislative meddling with ballot measures.

But Brain said the constitutional protection didn't apply. It prohibits the Legislature from doing things - such as amending or repealing voter-approved laws or diverting funds - but does not require lawmakers to do things, he said.

"The Voter Protection Act does not impose an enforceable duty on the Legislature to fund Proposition 204," he wrote in his seven-page ruling. "Simply put, the court lacks the authority to make the Legislature fund Proposition 204."

State lawmakers and Gov. Jan Brewer cut Arizona Health Care Cost Containment System, the state's Medicaid program, by more than $500 million to help balance the budget. AHCCCS won federal approval last month to cap enrollment for adults without dependent children, for savings estimated at $190 million.

Anne Ronan, an attorney with the Arizona Center for Law in the Public Interest, said the judge's ruling dilutes the initiative process and effectively repeals the law that voters approved.

She said they will appeal the decision. In the meantime, she said, low-income, chronically ill Arizonans are at risk.

"People are calling us every day who are being denied, with very serious health problems," Ronan said.

Prop. 204 initially relied on tobacco settlement dollars as the primary source of funding but required that it "shall be supplemented, as necessary, by any other available sources."

Attorneys for Brewer and AHCCCS argued that the reference to "available sources" gave them authority to cut AHCCCS, which serves 1.3 million people and has seen dramatic growth since the recession took hold. The state's financial crisis meant there was no money "available," lawmakers argued, and freezing programs beyond minimal federal requirements was the only way to keep the rest of the AHCCCS intact.

They also argued that the judicial branch had no business telling the Legislature how to appropriate state funds. "Arizona's Medicaid program was unsustainable," Brewer said in a statement. "This ruling ensures that elected officials maintain their authority to make difficult financial decisions on behalf of the state of Arizona."

Thousands of people fall off the AHCCCS rolls every month. Community groups, including Don't Get Dropped, say phone calls and anxiety levels are increasing.

"People are asking, 'What am I going to do?' " said Allen Gjersvig, executive director of the Keogh Health Foundation, which is spearheading Don't Get Dropped. "There aren't a lot of good choices."

Among those who are losing coverage are parents whose children reach maturity or who lose custody. Gjersvig said some people also are having trouble getting through to the state Department of Economic Security to complete their re-enrollment paperwork and required phone interview. The agency handles AHCCCS eligibility.

Roughly 250,000 people are covered under Prop. 204, including about 6,100 people with serious mental illness, 1,200 with HIV/AIDS and 1,500 young adults poised to age out of Medicaid coverage for children. Those three groups are largely exempted from the freeze.

AHCCCS also is awaiting federal approval for a raft of other reductions, including freezing enrollment for some low-income parents, eliminating non-emergency medical transportation in urban areas, imposing mandatory copayments, eliminating emergency services funding for people who can't prove citizenship and requiring AHCCCS patients to re-enroll every six months instead of annually.